Mass General Brigham to cut spending by $70M a year

Boston-based Mass General Brigham submitted a cost-reduction plan to Massachusetts regulators May 16, which includes a promise to cut healthcare spending by $70 million a year. 

The health system was ordered by the Massachusetts Health Policy Commission in January to develop a plan to reduce costs after the watchdog determined it had pushed healthcare spending above acceptable levels in the last few years. Specifically, the commission found that Mass General Brigham had substantially higher-than-average commercial spending from 2014 to 2019. The health system spent $293 million those years, more than any other provider in the state.

To achieve its spending reduction goal, Mass General Brigham said it would focus on four items: cutting prices, reducing utilization, shifting care to lower-cost sites and expanding value-based care. 

A key savings driver in Mass General Brigham’s plan is to lower outpatient and ConnectorCare rates to improve affordability. ConnectorCare is a program of subsidized private health insurance plans for patients whose family income doesn’t exceed 300 percent of the federal poverty level and who are not eligible for MassHealth, Medicare or other affordable health coverage. The health system expects to save about $53.8 million in spending a year through reducing these rates.

“Mass General Brigham is committed to expanding access to consumers, particularly in ambulatory care. To achieve improved access, we are focused on decreasing the price variation between Mass General Brigham pricing and the marketplace,” Mass General Brigham said in the performance improvement plan. 

The health system said it expects to save $10.8 million in spending a year by reducing unnecessary hospitalizations, emergency room visits and post-acute care and reducing use of high-cost outpatient imaging. 

The health system said it expects to save $5.3 million in spending a year by shifting care to lower-cost settings, such as moving to “hospital at home,” expanding telehealth or using other ambulatory sites. 

In addition to reducing utilization, shifting care to lower-cost sites and reducing price, Mass General Brigham said it is committed to expanding value-based care.

Mass General Brigham required to implement a cost-savings plan

https://www.healthcarefinancenews.com/news/mass-general-brigham-required-implement-cost-savings-plan

The Massachusetts Health Policy Commission has unanimously voted to hold Mass General Brigham accountable for its spending and is requiring the health system to develop and implement a performance improvement plan that will result in cost-saving reforms. 

The proposed performance improvement plan must contain specific cost-reducing action steps, savings goals, process and outcome metrics, timetables, and supporting evidence, among other requirements. 

MGB has 45 days to file the proposed performance improvement plan with the HPC, request a waiver from the requirement, or request an extension of the filing deadline. 

From 2014 to 2019, MGB had a larger, cumulative commercial spending in excess of the benchmark than any other provider, totaling $293 million, the HPC said. MGB’s ongoing cost-control strategies have not reduced its commercial spending growth to below-benchmark rates, the HPC Board said.

MGB is seeking to spend nearly $2.3 billion in Massachusetts on expansions and improvements at two of its hospitals and on the creation of three new ambulatory sites in the communities of Westborough, Westwood, and Woburn, Massachusetts. 

“Mass General Brigham has a spending problem,” HPC Chair Dr. Stuart Altman said by statement. “Its spending performance and plan for new expansions at their flagship hospitals and into the Boston suburbs raise significant concerns, as documented by the HPC today.”

The HPC’s analyses found that these expansions would increase commercial healthcare spending by at least $46 million to $90.1 million and translate into higher commercial insurance premiums for Massachusetts residents, families and businesses.

The HPC also said this would impact healthcare access and equity as care shifts to MGB providers from other providers in Massachusetts. Other providers are anticipated to lose $153 million to $261 million in commercial revenue each year. These other providers have fewer financial resources and lower average prices for commercially insured patients and they generally serve larger proportions of MassHealth patients and communities with higher social needs than MGB, HPC said.

Based on these findings, the HPC concluded these expansions are inconsistent with the Commonwealth’s healthcare cost containment goals.

The HPC’s Board took separate action, voting unanimously to issue a public comment detailing its analyses of the three expansion proposals currently under review by the Massachusetts Department of Public Health Determination of Need Program. 

WHY THIS MATTERS

MGB includes two academic medical centers and is the largest and generally highest-priced system in the Commonwealth, HPC said. 

The HPC’s findings and conclusions stand in contrast to those of Independent Cost Analyses that were conducted by a third-party vendor and released on December 28, 2021, which conclude that all three projects are consistent with the Commonwealth’s cost containment goals. 

The December cost analysis, part of the determination of need process, projected those three sites would result in a “small overall decrease” in healthcare spending, MGB said, according to WGBH. Its proposed suburban locations would give its existing patients a lower-cost option than hospital care and save them a drive into Boston, the report said.

Today’s comments by the Health Policy Commission ignore this state’s crippling healthcare capacity crisis — which preceded the pandemic, as well as the fact that patients deserve the choice to access high quality care, closer to their homes, at a lower cost,” MGB said, according to the report.

THE LARGER TREND

Massachusetts established the Health Policy Commission in 2012 as an independent government agency to lead collective efforts to make healthcare more affordable for residents.

This is the first performance improvement plan to be required from a provider or health plan by the HPC.